Thread by @SeanCasten

I continue to think LCOE is a lousy metric to understand the power sector. But when all-in costs for clean energy are lower than marginal costs for dirty energy, it's a big deal.

https://twitter.com/DrSimEvans/status/1407665289345568769

This is why I've been so focused on getting our financial regulators to start planning for the massive wealth transfers that are coming to our financial system. casten.house.gov/media/press-re…

The *physical* financial risks caused by climate change (property loss, crop failures, etc) are frightening but understandable. But in the near term, the *transition* risks may be bigger.

Clean energy is cheaper than dirty energy. That truth has been suppressed by decades of fossil fuel subsidies and the inherent difficulties for new tech competing against older tech with amortized capital.

But as those old plants retire, markets are wise enough to make their next investment in the cheaper technology. That's why coal power is dying: it's a lousy investment relative to the alternatives.

What's now happening is that the new tech is cheaper EVEN WITH the burden of capex recovery. The trickle of capital flight is on the cusp of becoming a flood.

And yet a lot of money - in banks, in pension funds, in 401ks is still tied up in yesterday's technology. It's imperative that our financial regulators plan accordingly

This is a good problem! Our economy writ large benefits from clean energy. But decades of subsidies and distortions have virtually eliminated the potential for a smooth transition.

Slowly rising tides lift all boats. What's coming is a tsunami.